Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-11-10
THE RAILROAD DEBT TO THE GOV
ERNMENT.
fSan Francisco Alta. |


THE RAILROAD DEBT TO THE GOV
EMINENT
lSan Francisco Alta
Ii is perfectly evident, as has been hereto
fore shown. that when the Pacific railroad
bill was passed those members of the Sen
ate and House who doubted the profitable
ness of the road when completed-of whom
the name was legion-could not have ex-
pected or intended that tine companies
should at all events repay the Government
bonds issued in their aid, otherwise than
by service, etc. Il is notable fact, how
ever, that the more sanguine friends of the
measure were equally guiltless of any such
expectation or Intention. All of them who
expressed themselves ct ali upon the SUBJ
iect, declared that the Government trans
portatioa provided for in the bill. consider
ing the saving to the Government thereby
effected, would be more than sufficient to
compensate the nation for It's money outlay
even before the bonds were due. Not one
Of them, 80 far as we can ascertain, seri-
ously contemplated any other payment
than in such transportation and in the
per cent. of net earnings mentioned in the
bill. That this WAS the understood mode
of payment is especially apparent in the
House discussions upon the subject In
deed, we may remark by the way, the bill
as il first passed the House indicated this
on its face, as was distinctly shown by
Senator Collamer in the subsequent debate
in the Senate. But of this we shall speak
m IRE particularly hereafter.
Mr.. Campbell, one of the foremost cham
pions of the bill in the House, both in zeal
and ability, who reported the bill from the
committee which prepared it, and who had
it in charge, on April Sth, in an elaborate
argument in favor of the bill, after citing
statistics to show that at that time, under
peace establishment, the COS. to the Gov
eminent of army, navy and postal trans
portations to the Pacific coast, was 81, 357,-
ISL per annum, stated that the aggregate
sum in bonds required by the bill TO be is
sued in favor of the road and its connec-
tons was about $50, 100000, and said:
| The bonds are to be issued at thirty years,
and to bear interest at the rate of six per cent
| per annum. When all the bonds shall have
! been issued (Which will necessarily be at the
completion of the road) the aggregate annual
| interest will amount to IS, S92 $50. have shown
| that the army and navy transportation, and
| postal service to the Pacific. cost the Govern
ment annually 81 ,357, ISL Take then the annual
expenditure, and we have left sinking fund
of s, 465, 701 sum more than sufficient 10 ertin-
giGlSh the bands before they come due (the italics
are Mr.. CampbelPs) or what is the same thing
| in effect, saved to the Government by cheaper
X.
Globe I'd Sess. S1th Cong, p. 1871
And Mr.. Campbell proceeds to show that,
| by the war, the cost of this Pacific Coast
Governmenttransporta had been greatly
increased, and would probably remain for
\ the future, in the absence of railroad at
much higher Inquire than in the past, and
| that the saving would therefore be much
| greater and the extinguishment of the debt
much more rapid than was stated in the
| previous estimate. 1t is true that Mr..
| Campbell's argument, that the building of
! the road, with the aid and upon the terms
| proposed, would save to the Government
| in cost of transportation, more than enough
| to pay the bonds before their maturity,
may not necessarily perhaps import that
the services of transportation was expected
to pay the bonds as between the Govern
ment and the companies. But we are
to rememoe. that the bill before the
House provided only for payment in that
mode and in the percentage of net earnings,
and that if the road was success, as Mr..
Campbell expected it to be, and if just rates
OF transportation were allowed by the Gov
ment to the companies, the proposed mode
OF payment would be entirely sufficient 1t
is at all events clear that no one taking Mr..
CampbelPs view of the saving in trans
portation to be effected by the construction
OF the road, could intend to expect that the
Government, at the maturity of the bonds,
should be harsh and exacting in its deal
lngs with the companies and demand re-
payment of its advances in money, al
though already more than repaid in the
actual value of the services. This would
be to out-Shylock Shylock, for it would be
to demand what was not nominated in
the bond" The mode of payment "nomi-
mated in the contract, as already stated,
was in services and the 5 per cent. of net
earnings.
MIR. Phelps, of California, distinctly
avowed the intention of the trainers of the
bill that the repayment of the money ad-
vanced was TO be in the services and per-
centage stipulated. He said:
It may be urged by some that the expenditure
will be large True, nomipally it is so. but in
| fact it is most insignificant considering the
great results to be gained. The whole Of the
land to be donated should all the lines of the
road mentioned in the Act be built, amounts.
at Government prices, to not more than ST.
100000 So far as concerns the issue of bonds
by the Government, the amount which is pro-
vlded may be issued, as the road. by sections
OF forty miles,ls fully completed, does not ex-
coed one half the cost of its construction and
the issue is only made on first mortgage of the
road, which is to be unincumbered by any
other lien whatsoever, the mortgage STIMULATING
that the company will pay back to the Govern
ment in mail and military services and in
money the principal and interest of the bonds
III case of failure on the part of the company
to fulfill the conditions imposed. Gong. Globe,
I'd sess., S1th Cong, p. 159l)
The payment in money! here men
toned by MIR. Phelps plainly refers to the
percentage OF net earnings spoken of in
the bill. The whole tenor of his remarks,
indeed, shows that he regarded the specified
mo lie of payment as exclusive.
The mode of reasoning pursued by Mr..
Campbell in the House was followed also
in the Senate by the more ardent and san
guine friends of the bill Thus Mr.. Latham
said
The loan of the public credit at six per cent
Tor thirty years is for S65, 600 with absolute
security oy lien, with stipulations by sinking
fund from profits for the liquidation of the prin-
cipal. Official reports and other auth jritatiye
data show that the average annual cost, even in
times OF peace, in transportation of troops with
munitions OF war, subsistence and quartermas-
tiers supplies may be set down in round num-
beis at 81 300, 600. the interest upon the credit
loan OF sos, 900 of bonds will be annually
s3,SO,OO leaving net excess of S. 400 600 over
the present cost; appealing with great force to
to the economy of the measure, and showing
beyond cavil or controversy that in fact the
Government viii not have a dime to nav on ac-
count OF its credit, nor risk a dollar by the Act
authorizing the construction of this great work
The United States. if there is force in figures,
facts and reason, will secure with a land grant
of 100000 acres of wild lands, without faith
ing cost, or outlay or risk, either present or
future, road that will span halfa continent, be
the great highway of domestic trade, and
eventually make the Union the center of the
commerce of the wsrld. Gong, Globe I'd Sess.
3Ith Cong, p. 2677.)
This same argument was used also BY
Senator McDougall, of California, who
went further, apparently, and clearly indi-
Gated that in his judgment the companies,
as well as the Government, should have
the benefit of the saving in Government
fro
guishment of the debt. After referring to
MIR. Campbelfs statement in the House.
that the annual cost of the Government
transportation at that time aggregated ST.
S57 600, he said:
l now call the attention of Senators to this
consideration, or rather to this pregnant fact
not to be ignored or avoided, that is that the
difference between S3773000 and present cost.
sS,S57,000 with the five per cent reserved to the
Government by the bill, would necessarily paw
the Government bonds and interest years before
| the Government bonds would mature. Gong.
Globe, I'd $685. S7th Cong. Appendix p. 367.)